Archive for the 'Tanzania' Category
October 17th, 2010 by Tom Minney
The African bond market continues to expand, with many countries raising money on world capital markets. They are taking advantage of low global interest rates and many investors turning to African debt, partly fuelled by better economic management in Africa. Yields are near zero in Europe, the U.S. and Japan, and investors are looking to new frontiers.
Africa has massive capital needs to fuel its anticipated long growth run. The temptations to rack up debt again remain. The World Bank estimates that Africa needs to spend $93 billion a year on power, transport and water projects over the next decade to lift growth in the world’s poorest continent.
Bloomberg news agency reports that Nigeria appointed Barclays Capital in October as an adviser for its planned $500 million Eurobond. Zambia plans to raise $1 billion on the back of a planned sovereign credit rating this year.
Other African nations are dusting off plans to sell Eurobonds – bonds issued in an international currency, not the local one – to international investors. Many plans had been shelved in the global financial crisis in late 2008.
Bloomberg quotes Tanzania’s Deputy Finance Minister Omar Yusuf Mzee as saying that Tanzania is returning to work on its bond plan after postponing a sale of $500 million of the securities in 2008.
Angola has been talking for some time about raising $1 billion – $2 bln through international bonds this year. It received a B+ credit rating from Standard & Poor’s and Fitch Ratings in May.
Kenya plans to wait on its planned $500 million sovereign bond as the global recovery is “still uncertain,” according to Geoffrey Mwau, economic secretary in the Finance Ministry reportedly in August.
Sudan is next year to seek investors from the Persian Gulf region for $300 million of Islamic bonds because U.S. economic sanctions have denied the country access to other international markets, central bank Governor Sabir Hassan told the agency in an interview in Khartoum on 6 Sept.
Economic growth for Africa is expected to be more than 5% a year, says Bloomberg, fuelled partly by investment from China and India and partly by its own growing consumer spending. Infrastructure to be upgraded includes obsolete road and rail networks and power generation, where may countries face more power shortages – Bloomberg says that a continent of 1 billion people that has electricity capacity equivalent to Spain.
Bloomberg cites Samir Gadio, an emerging- markets strategist in London at Standard Bank Group Ltd: “The timing is perfect. Global yields are extremely low and that’s pushed a lot of countries to tap international markets. We’ll see good demand for these bonds. There’s just so much excess liquidity across the globe.”
South Africa’s $2 billion bond maturing in March 2020, yielded 3.69% recently (on 11 October), 138 basis points lower than when the securities were sold in June, according to data compiled by Bloomberg. The yield on Ghana’s 8.5% dollar-denominated bonds, due October 2017, has fallen 239 basis points to 5.78% during 2010.
According to the report, David Damiba, managing director in London for Renaissance Asset Managers,says: “It’s a fantastic idea to diversify their sources of funding. It’s important that these countries would want a benchmark bond” so that other assets can be priced appropriately by investors.
Another proponent is Stuart Culverhouse, chief economist of London-based Exotix Ltd., which advises clients on investments in illiquid markets. “Africa is relatively new to investors. After the last 20 to 30 years of really bad news, the past 5 to 6 years have been generally positive. There’s a cash pile just waiting to be invested. African Eurobonds will definitely be well-received.”
Some economic fundamentals have improved in Ghana, Zambia, Nigeria, Tanzania and Uganda. Most of their foreign debt, totaling about $33 billion, was canceled by lenders such as the International Monetary Fund and the U.S. starting in 2000.
Nigeria’s sovereign debt was 15% of gross domestic product in 2009, according to data from the IMF. That compares with 115% in Greece, 77% in Portugal and 116% in Italy. The report cites the IMF’s April 2010 Regional Economic Outlook for Sub-Saharan Africa. as saying in 2009 government debt was 26% of GDP in Zambia, 37% in Tanzania and 60% in Ghana.
Eurobond sellers will have to rein in fiscal deficits and limit any shortfall in their current accounts, to show that they can repay the money.
“It puts the countries on their toes,” said Kofi Wampah, first deputy governor of the central bank of Ghana, which is considering selling its second security in international markets, speaking to Bloomberg in an interview from his office in Accra on 7 Oct: “You have to ensure that your fundamentals are always right.”
August 29th, 2010 by Tom Minney
South Africa’s Standard Bank (www.standardbank.com) will provide $100 million as credit to up to 750,000 farmers in 4 African countries in the next 3 years, according to an interview given by Clive Tasker, CEO for Africa, to Reuters newsagency. The bank is to offer the credit in Uganda, Ghana, Mozambique and Tanzania to help boost agricultural production and economic growth. It is a pilot scheme agreed with some institutions and aims to boost export crops.
Reuters quotes Tasker as saying: “This scheme will disburse loans to small-holders of up to $100 million over the next 3 years and will potentially benefit up to 750,000 small-scale farmers.” He said the bank was also planning a broader financing scheme for other farmers in Africa and would consider projects that aimed at raising production of cash crops: “We are committed to financing agriculture across the full scope of the industry.”
Priority will go to growing crops such as cocoa in Ghana and cashew nuts in Mozambique. “We will help farmers with the right seeds, fertilisers, and ask them to have crop insurance to mitigate our risks,” Tasker said. He added the bank would finance farmers’ co-operatives and agro-businesses to boost trade. Increased production of crops would help African economies to grow and lift millions of people out of poverty.
Reuters reports that Africa has vast water resources and arable land but also food shortages, and says analysts partly blame this on mismanagement of funds, poor government policies and lack of support infrastructure for farmers.
Standard Bank said there was increasing global demand for African produced cocoa, coffee, tea and horticultural crops. Reuters says there is also increased investment, including equity funds seeking land deals and South African and other farmers who are investing in other African countries to grow cash crops.
February 4th, 2010 by Tom Minney
A new CEO started work at the Dar es Salaam Stock Exchange (www.dse.co.tz) and share prices surged in the following days, although market participants denied any connection with the appointment.
The governing council of the DSE appointed 46-year-old Mr Gabriel Kitua, replacing Jonathan Njau, whose tenure has expired after serving 2 terms of 3 years each. Previously Mr Kitau was director of research, policy, planning and information technology for seven years at the Capital Markets and Securities Authority (www.cmsa-tz.org), which regulates the DSE. Peter Machunde, chair of the DSE governing council, was reported in local media as saying that the new CEO had the requisite skills and experience “to take the stockmarket forward in the next phase of its development.”
Share prices climbed in the following three days, but Orbit Security senior broker, Florian Kahabi was quoted in the press as saying: “There is no relation between the CEO’s appointment and trading at the market as it is driven by supply. January is back-to-school month and parents are disposing their shares to offset fees obligations.”
It is a paradox of that selling shares into illiquid markets that increased supply can lead to more trading and prop up prices.
January 25th, 2010 by Tom Minney
A new fund is making good progress in raising up to US$55 million to be invested in business start-ups and small and medium enterprises in Kenya, Rwanda, Uganda, and Tanzania. The Fanisi Venture Capital Fund was set up with help from Norwegian Investment Fund for Developing Countries (Norfund) and incorporated in Luxembourg. Norfund is also an investor and a shareholder in the management company, Fanisi Capital Ltd.,,which is majority owned by Nairobi-based Amani Capital Ltd.
Fanisi has raised $40 mln in commitments and expects to reach its goal in the next 12 months. On 22 January, the Internatonal Finance Corporation (www.ifc.org), part of the World Bank group, announced it will invest $7.5 mln.
According to an IFC press release: “The fund plans to make investments between $500,000 and $3 million in a variety of sectors, ranging from manufacturing to technology, helping smaller enterprises and start-ups get the capital they need to create and expand businesses. It also will set up a business services support facility to help pipeline companies overcome technical and governance limitations, pre- and post-investment.”
It quotes Ayisi Makatiani, head of the fund’s investment team and CEO of the fund nabager: “IFC’s early and continued support to the Fanisi team has been extremely helpful, especially for a local and first-time fund management platform.”
IFC’s Gender Programme has agreed to support the business services facility, and IFC’s Rwanda Enterprise Development Programme will provide training support to the fund’s portfolio companies.
Haydee Celaya, IFC Director for Private Equity and Investment Funds, said, “IFC is investing in this local private equity fund that focuses in growing SMEs and startups at a critical time, when the region needs long-term financial and advisory support. The investment also will help build local fund management capacity.”
IFC is currently seeking a capital increase to strengthen its ability to create opportunity for the poor in developing countries—including by investing in private equity funds that target small enterprises in developing markets. Smaller enterprises are responsible for much of the job creation in the East African region.
December 17th, 2009 by Tom Minney
The curriculum of the Securities Industry Training Institute (SITI) has been launched in Kampala, Uganda. Its establishment in September and development have been funded by International Finance Corporation, the private sector investment arm of the World Bank, as part of its Efficient Securities Markets Institutional Development programme (www.ifc.org).
SITI aims to standardize training on a wide range of programmes on capital markets and investments, corporate finance, asset management, entrepreneurship, corporate governance and other related fields of study. Eventually, all brokers, fund managers and investment advisors will require certificates to operate.
Simon Rutega, CEO of the Uganda Securities Exchange (www.use.or.ug), launched the institute and says it will serve the East Africa trading market that is gradually being integrated. He is Chairman of the Board of SITI East Africa and other members are reportedly Rose Mambo (CDSC Kenya), Jonathan Njau (chief executive of the Dar-es-Salaam Stock Exchange), Robert Mathu (executive director of the Rwanda Capital Market Advisory Council) and Peter Mwangi (chief executive of the Nairobi Stock Exchange).
Future training programmes include training for board members of USE in February, and training for the media. Rutega reportedly said: “The intention is to have as many people trained as possible. The point there is also the integrity and standardization of the market.”
The institutions – Uganda, Nairobi and Dar es Salaam securities exchanges and Rwanda’s Capital Markets Authority agreed a standardized curriculum which will be administered by SITI.
According to Rwanda’s New Times newspaper, CMAC Operations Manager Celeste Rwabukumba says all practitioners will be required to have training by SITI to learn the rules and regulations of the industry: “This is a good development which will give market actors the understanding of the regional market, experience, how the business operates as well as the harmonization of the regional stock markets.” Rwanda has seven registered stock brokers companies which focus mainly on corporate finance, stock brokerage and advisory services among others.
According to the report, only Tanzania in the region has a certification programme.
August 22nd, 2009 by Tom Minney
Tanzania seems to be warming to the idea of linking the East African stock exchanges, in what could eventually be the development of a major regional market.
According to local media reports, Acting CEO of the Dar es Salaam Stock Exchange Mary Mniwasa said it is ready to join a software called Smart Order Router which links the securities exchanges of the East African Community member states. She is reported to have said the system will allow a stockbroker from the DSE, the Nairobi Stock Exchange and the Uganda Securities Exchange to see the markets and trade across borders without physically contacting a local market stockbroker.
The report quotes Simon Rutega, CEO of the USE, as saying Uganda fully supports the proposed integration of stock markets in east Africa. They have started using Central Depository Securities for holding securities and assisting in settlement.
The DSE and USE have long been dogged by lack of liquidity and outside investor interest. The newspaper cites a study by Codogan Financial & Associates, funded by the Efficient Securities Markets Institutional Development Initiative of the International Finance Corporation, part of the World Bank group. According to this, there are simply too few institutions and individuals who wish to invest in East Africa. The objective of the EAC stockmarkets integration is to enable consolidated EAC capital to flow and participants to operate freely across borders
The integration is being guided by an East African Securities Exchange Association, comprising the chief executives of the four exchanges – Dar, Nairobi, Uganda and Rwanda’s recently formed Over-The-Counter market. The original timetable was set in 2008 when the association resolved that a single clearing and settlement infrastructure was to be implemented within 3-6 months after January 2009. Senior members of the NSE are doubtful on progress.
One of the initiatives of the association is to integrate trading, clearing and settlement infrastructures within the EAC to facilitate a faster trading system within the bloc.
Tanzania has previously barred non-citizens from participating in initial public offers, such as when a 21% stake in the National Microfinance Bank was floated last year. In March 2008, it blocked its citizens from participating in the Safaricom IPO in Kenya.